Mexico Manufacturing Set To Gain From China Labor Unrest

Without a doubt, Mexico Manufacturing conditions offer greater favorability for global car companies to move production to Mexico manufacturers.  The recent labor strike at a Honda transmission plant in China resulting in a 24% wage hike for employees offers a case in point.  When factoring in a staggering $1,200 to $2,000 shipping cost per car across the Pacific with the $7 per hour all-in cost (including benefits) for Mexico Manufacturing production, the options become clear for near-shoring moves.  Entrada Group’s established facility in Zacatecas offers promise for businesses looking to reduce costs, risk, and shipping time for automobiles certainly, but even for auto parts, which are also cheaper south of the border.

The reason?  Besides the obvious geography, the economic environment is friendly.  Mexico has tariff-free trade deals with 25 countries which provide favorable conditions for Mexico manufacturing.  Already Mexico manufacturers provide 16% of vehicle production to the North American market and it is projected to increase to 20% within the next few years.  Auto parts manufacturing broaden this natural expansion given Mexico’s tariff-free environment allowing it to easily import raw materials and export production.  Even Japanese car companies have directed suppliers to produce auto parts in Mexico (not Asia) to supply to the US market as the overall benefits becoming increasingly more obvious.

Without a doubt, Mexico Manufacturing conditions offer greater favorability for global car companies to move production to Mexico manufacturers.  The recent labor strike at a Honda transmission plant in China resulting in a 24% wage hike for employees offers a case in point.  When factoring in a staggering $1,200 to $2,000 shipping cost per car across the Pacific with the $7 per hour all-in cost (including benefits) for Mexico Manufacturing production, the options become clear for near-shoring moves.  Entrada Group’s established facility in Zacatecas offers promise for businesses looking to reduce costs, risk, and shipping time for automobiles certainly, but even for auto parts, which are also cheaper south of the border.

The reason?  Besides the obvious geography, the economic environment is friendly.  Mexico has tariff-free trade deals with 25 countries which provide favorable conditions for Mexico manufacturing.  Already Mexico manufacturers provide 16% of vehicle production to the North American market and it is projected to increase to 20% within the next few years.  Auto parts manufacturing broaden this natural expansion given Mexico’s tariff-free environment allowing it to easily import raw materials and export production.  Even Japanese car companies have directed suppliers to produce auto parts in Mexico (not Asia) to supply to the US market as the overall benefits becoming increasingly more obvious.

Source: http://www.businessweek.com/autos/autobeat/archives/2010/06/labor_unrest_in_china_could_be_mexicos_gain.html


« Return To Library